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Motorola brings reality to LTE hype

The unexpected launch last week by TeliaSonera of a commercial LTE service took the telecoms world by surprise. This first deployment of the technology, albeit just past the prototype stage and with very limited coverage, triggered an avalanche of press coverage proclaiming that a new world had dawned.

However, with the exception of a small number of operators, such as Verizon Wireless and NTT DoCoMo who have particular needs, there will be no general stampede to deploy LTE by other celcos.

Motorola, not the biggest infrastructure player in the world, neatly summed up the situation by questioning whether deploying LTE would boost operator revenues in the coming years.

Its head of wireless networks, Bruce Brda, believes that operator income was unlikely to see an upturn given that ARPUs were stagnant across developed markets, despite booming demand for mobile internet services.

"The increase in demand for mobile broadband is skyrocketing and the ARPU increase is almost insignificant. The economics just do not work," Brda said. "The only way to afford 4G investment is to cut back on 3G."

The outcome, if you accept Brda's viewpoint, is that infrastructure vendors will not see any increase in operator Capex expenditure as they juggle the numbers to keep their shareholders quiet.

This, if true, will be exceptionally bad news for the European-based vendors, with Huawei and ZTE breaking into markets that were strongholds of these long-established equipment suppliers.

Not a comfortable scenario for these vendors as they enter 2010, especially looking back over the past 10 years which boomed (largely) with infrastructure contract awards.-Paul